China’s ability to issue dollar-denominated bonds at yields equivalent to U.S. Treasuries is a significant development that should not be overlooked. It reflects the growing confidence in China’s fiscal and monetary stability.
However, this also shows how abundant global liquidity is, and how risk has taken a back seat. Investors are holding record levels of cash and few assets are offering meaningful yield. Risk tolerance has risen across the board. Capital that once demanded a premium for emerging-market exposure is now willing to accept near–Treasury-level returns simply to stay invested. It’s a hallmark of late-cycle conditions where liquidity, not fundamentals, drives pricing.
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China’s ability to issue dollar-denominated bonds at yields equivalent to U.S. Treasuries is a significant development that should not be overlooked. It reflects the growing confidence in China’s fiscal and monetary stability.
However, this also shows how abundant global liquidity is, and how risk has taken a back seat. Investors are holding record levels of cash and few assets are offering meaningful yield. Risk tolerance has risen across the board. Capital that once demanded a premium for emerging-market exposure is now willing to accept near–Treasury-level returns simply to stay invested. It’s a hallmark of late-cycle conditions where liquidity, not fundamentals, drives pricing.